Legal & General widens housing portfolio

Insurer Legal & General Group has bought out the joint owner of Cala Homes in a deal that values the housebuilder at £605 million.

The acquisition meant buying up the remaining 52.1% of Cala Homes that L&G did not already own for around £315 million, having shared ownership with Patron Capital Partners.

The deal involved additional transaction costs as well as “financial adjustments” meant to “reflect the contribution of management and Patron during the period of our joint ownership,” L&G said.

The housebuilder’s chief executive Alan Brown said the deal marked “the start of another exciting new chapter for Cala Homes”.

He said: “Over the past five years we have become one of the UK’s fastest-growing housebuilders and this is testament to the strength and ambition of our team, the quality of our homes and our approach to customer service.

“We have also benefited from the ongoing backing of our shareholders and I would like to take this opportunity to thank Patron for their support alongside Legal & General.”

The housebuilder saw its revenues grow threefold under its joint ownership, growing from £241 million in 2013 to £748 million in 2017, while profits grew at a compound annual growth rate of 12% over the past three years.

L&G said it believes Cala Homes had “attractive growth prospects” under full ownership of its capital division, given its long-term approach to investing and the “attractive market for house building in the UK”.

Cala Homes is focused on “high quality family housing” having completed 1,677 sites in 2017.

Around 1,322 private homes were sold at an average price of £497,000, with more than 60% of profits coming from English regions and the remainder from Scotland.

It said 21% of its units were affordable homes.

Kerrigan Procter, chief executive of L&G’s capital division, said: “Legal & General is delighted to assume full ownership of Cala Homes, a growing business which we know and understand well.

“It has a strong management team with proven experience of managing a housebuilding business across business cycles, and has delivered great returns for shareholders since its acquisition in 2013, having tripled in revenue during this time.

“I am excited to be working with the team as Cala Homes continues to develop and grow under our continued ownership.”